The snooping intermediary (Airtel) in this scenario is one that has a commercial relationship with CloudFlare and powers CloudFlare's network.
CloudFlare has been aware of this issue for years, but it hasn't done anything to get its vendor to fix their network.
https://en.wikipedia.org/wiki/Internet_censorship_in_India
I don't see how Cloudflare or any other provider can make Airtel "fix" the snooping when Airtel is forced by law to block those sites.
This seems to be a policy/government problem, not a Cloudflare or Airtel problem.
Airtel isn’t forced to block these sites. It is blocking these because of a mis-configuration somewhere.
More broadly, if enabling a particular Cloudflare feature (in this case, Flexible SSL) constitutes "misusing Cloudflare", then Cloudflare should simply not offer that feature at all. There's a bit of a balance here; when they introduced it in 2011, a lot of hosts didn't offer HTTPS at all and none of them offered it for free. MITM is genuinely more likely to happen between the end user and Cloudflare than between Cloudflare and the origin server (because the former can involve things like unsecured coffee-shop wifi), so for webmasters who couldn't use end-to-end HTTPS, it provided a real security benefit—which had to be weighed against the cost of telling end users that their connection to the site is secure against interception, when that wasn't entirely true.
I think there's a case to be made that this tradeoff was worth it in 2011 but is not worth it in 2022; today, end-to-end HTTPS can be had for free, and is easy enough that there's usually no excuse not to.